Motor insurer Admiral failed to be driven higher, despite another broker saying the stock has been oversold and is due for a bounce.
Keefe, Bruyette & Woods (KBW) initiated coverage of the shares with an outperform rating and £12 price target in a note entitled “sunshine even in cloudy skies”.
In an extensive 52 page note on the shares, it argued the company has a very strong underlying business model and market-leading underwriting skills.
“On a best-estimate basis, Admiral offers considerable value,” KBW explained. “This is even after assuming a delay until 2009 in the underwriting cycle turnaround, at which point we assume premium rate increases of 15% followed by 9% in 2010.”
The bullish comments comes a week after UBS upgraded the shares from neutral to buy.
However, as Insurance Times went to press, investors continued to sell Admiral, causing the stock to hover around 872p – just shy of its year low.
Dealers said the upbeat research has been outweighed by Admiral’s decision to shelve its plans to sell a stake in its price comparison website, confused.com.
Speaking of internet companies, Moneysupermarket.com attracted attention as further details of its London float were unveiled.
The price comparison site will be valued at between £864m and £1.05bn after setting a range of 170p-210p for its shares. This is at the lower end of the pricing range. The shares are expected to begin trading on July 31.
Yvette Essen is stock market reporter for the The Daily Telegraph